AGP Executive Report

Energy & Shipping Shock: Iranian crude and condensate exports fell to a six-year low in May, with analysts pointing to the U.S. naval blockade and Strait of Hormuz disruption that’s also hitting regional exporters and insurers. Iraq Oil Exports & Routes: Iraq is pushing to restart and expand oil output and exports via alternative corridors, including Turkey’s Ceyhan route and plans tied to Development Road logistics. Kurdistan Oil Operations: Baghdad and Kurdistan Region authorities are moving to resume oil operations and exports, with Ceyhan-linked arrangements highlighted as key for revenue stability. State Control & Security: Iraq’s government is intensifying efforts to centralize weapons under state authority and tighten ties with armed groups, signaling a major shift in how security and industry-linked stability are managed. Trade Policy Pressure: The U.S. proposes forced-labor-related tariffs that include Iraq, adding new compliance risk for Iraqi exporters. Basra Border Move: Basra is set to inaugurate Iraq’s largest border crossing with Iran next week, a practical step for cross-border trade flow amid regional tension. Business & Infrastructure: Turkey is discussing reviving the Hejaz Railway and extending it toward Oman as an alternative trade corridor to reduce chokepoint dependence.

Iraq’s Development Road: Iraq is set to start implementing its $17bn Development Road project, linking Basra’s al-Faw Grand Port to the Turkish border with rail, highways, energy and telecom links, aiming to turn Basra into a Europe-bound transit hub. Basra-Iran border push: Basra plans to inaugurate its biggest border crossing with Iran next week, including the 36-km Shalamcheh rail corridor, with remaining land, school and utility relocations expected to be cleared within three months. Kurdistan oil exports resume: Erbil and Baghdad agreed to restart Kurdistan crude exports via Turkey’s Ceyhan port, with the federal government taking responsibility for attacks on oil fields inside Iraqi territory. Baghdad fuel squeeze: A worsening gasoline shortage is driving long queues and a black market in Baghdad, where prices can reach up to three times the official rate. State control of weapons: Iraq’s Joint Operations Command formed a committee to sever militia ties with the PMF and consolidate weapons under state authority, as Prime Minister Ali al-Zaidi pushes disarmament and reintegration. Turkey corridor strategy: Turkey is also advancing plans to modernize the Hejaz Railway and extend it toward Oman as an alternative trade route that could reduce reliance on Hormuz.

Forced-Labor Tariffs: The US Trade Representative proposed Section 301 tariffs on imports from 60 economies after finding they failed to block forced-labor goods, explicitly listing Iraq among the countries facing 10%–12.5% duties. Arms Under State Control: In Iraq, Baghdad is pushing factions to place weapons under state authority, but reports say a delayed showdown may be coming as groups break away from the Popular Mobilization Forces and set conditions for disarmament. Kurdistan Oil Restart: Iraq’s PM ordered oil companies to resume operations in Iraqi Kurdistan after drone attacks disrupted fields, aiming to stabilize production and offset Hormuz-linked export losses. Pipeline Export Surge: Iraq approved plans to boost crude exports via pipelines to 770,000 bpd within about 75 days, expanding flows through Turkey’s Ceyhan route and arranging handling via Syria’s Mediterranean ports. Maritime Security Flashpoints: The Gulf remains tense as Iran-linked claims and denials continue around attacks on MSC vessels near Iraq’s ports, keeping shipping risk and insurance concerns in focus. Energy-Trade Pressure: The wider Iran conflict is also driving renewed scrutiny of regional energy chokepoints and supply routes, with knock-on effects for Iraq’s export strategy.

Kurdistan Oil Restart: Iraq’s PM Ali al-Zaidi ordered oil companies in the Kurdistan Region to resume operations from Thursday after drone-linked shutdowns, citing the need to offset losses from the Hormuz Strait disruption. Export Corridors: Baghdad also approved plans to more than triple crude exports via the Kurdistan–Turkey pipeline network to Ceyhan, targeting 770,000 bpd within about two and a half months. Southern Production Recovery: Iraq restarted key fields including West Qurna 1 and Majnoon, lifting output to roughly 1.5–1.6 million bpd as the country races to rebuild export capacity. Arms Under State Control: A pro-Iran faction, Saraya Awliya al-Dam, said it will not disarm unless Baghdad guarantees full Iraqi sovereignty, ends foreign military presence, and supports air-defense capabilities. Anti-Corruption Crackdown: Iraqi anti-corruption authorities seized weapons and cash during the arrest of a senior oil deputy minister, signaling a tougher push against graft in the energy sector. Security Threats: PMF said three IS militants were killed in Nineveh during operations targeting logistics in al-Baaj. Environment Cooperation: Iraq’s environment minister met France’s ambassador to discuss water treatment, wastewater, air pollution, and climate support.

EBRD Outlook for Iraq: The European Bank for Reconstruction and Development cut its 2026 growth forecast for Iraq by 5.1 points, now expecting a 1.5% contraction, blaming the Middle East war’s energy shock and supply-chain strain. Gulf Shipping Pressure: Fresh Iran–US flare-ups saw missiles and drones aimed at Bahrain and Kuwait reported as intercepted or failing, while Qeshm Island strikes and Hormuz disruption fears kept oil prices moving. Maritime Risk for Iraq Ports: Reports say an IRGC attack hit MSC containerships off Iraq’s Umm Qasr, raising security concerns for regional shipping lanes. Arms and State Control: Iran-backed Iraqi factions Asaib Ahl al-Haq and Imam Ali Brigades announced plans to disengage from PMF and place weapons under state control, a move tied to Sistani’s call for a state monopoly on arms. Nuclear Security Spillover: The IAEA said the UAE’s Barakah plant drone attack was “carefully targeted,” with repairs expected in weeks, and noted the drone was launched from Iraq—highlighting wider regional risks to critical infrastructure.

Maritime Security in Iraq: MSC confirmed its containership MSC Sariska V was hit by two projectiles off Umm Qasr; the crew was unharmed and MSC called the reported IRGC claim “completely unjustified,” while UKMTO had earlier reported an explosion near the port. Iraq Anti-Corruption: Iraq’s Federal Integrity Commission says it uncovered nearly 2 billion dinars in embezzlement in Diyala’s electricity directorate, dismissing four senior officials over theft of electrical materials and misuse of public funds. Armed Groups & State Control: Iran-backed Asaib Ahl al-Haq announced it is disengaging from the Popular Mobilisation Forces and moving all weapons under state control, citing demands for a monopoly on arms. Energy & Shipping Risk: Analysts warn Strait of Hormuz transits remain rare despite some ships slipping through, with mines, missiles, and fast-attack boats still posing a “triple threat” that keeps insurance and crew confidence tight. Regional Diplomacy Signals: Trump says US-Iran talks are continuing “at a rapid pace,” while Iranian media reports Tehran is reviewing a halt-war agreement but has paused message exchanges via mediators amid Lebanon escalation.

Private-Sector Investment Push: Iraq’s planning ministry says the 2024-2028 development plan expects nearly $65bn in private investment, targeting water, sewage, roads, electricity, energy, gas, housing, reconstruction, municipal services, health, education, food security, agriculture, transport and communications, plus big projects like the Development Road and Grand Faw Port. Archaeology Protection in Saladin: A Tikrit corniche project east of the city will not affect the nearby Tell Hatra archaeological mound, Iraq’s antiquities department says, calling social-media claims inaccurate and stressing ongoing monitoring of licensed development. Shipping Shock Near Umm Qasr: A cargo ship was hit in the Arabian Gulf near Iraq; UKMTO reported impacts and a large explosion southeast of Umm Qasr, while Iran’s IRGC claimed it targeted MSC Sariska V with a cruise missile. Energy Market Spillover: Oil prices jumped after reports of stalled US-Iran talks and threats to disrupt Hormuz and other shipping routes, underscoring how regional tensions are feeding directly into Iraq’s import and logistics costs. Basra’s Security-Trade Link: Basra’s militia influence and its role as Iraq’s Gulf outlet keep local politics tightly tied to regional strikes, with border areas used for attacks and drone/rocket launches.

Shipping & Ports: A cargo ship near Iraq’s Umm Qasr was hit by an unidentified projectile, triggering a large explosion and fire, with UK maritime authorities saying they saw no confirmed environmental damage and that investigations are ongoing—another sign of how quickly Gulf shipping risks are blurring into conflict. Energy Security: Iran-linked reports say Tehran has suspended indirect talks with the US via mediators over Israel’s Lebanon campaign, while also signaling possible pressure on key chokepoints beyond the Strait of Hormuz, including Bab al-Mandeb—raising fresh concerns for global oil and regional trade flows. Diplomacy Under Strain: Multiple reports describe ceasefire talks fraying as Lebanon becomes a sticking point; Iran says any violation on one front undermines the whole ceasefire, while the US says it wasn’t formally notified of a halt. Iraq Investment & Construction: TMG secured an Iraqi investment licence for an $18.8bn mixed-use development in southwest Baghdad, targeting about 43,000 homes and major retail, education, healthcare, and civic facilities. Infrastructure & Industry Tech: Montréal’s Derq INSIGHT rollout across 100 intersections highlights how AI safety analytics are being deployed at scale—useful context for Iraq’s own transport modernization push. Local Economy & Agriculture: Iraq’s Wasit province bans livestock entry to curb CCHF spread, adding pressure to local supply chains while aiming to protect public health.

Livestock & Health: Wasit Governor Ali Salimoun ordered border closures for livestock unless they meet approved veterinary and health requirements to curb Crimean-Congo Hemorrhagic Fever (CCHF), as Iraq reports 53 cases and nine deaths so far in 2026. Food Imports & Trade Logistics: A shipment of 44,000 tons of US rice reached Jordan’s Aqaba Port for Iraq despite regional shipping disruptions tied to the Iran war, with Iraq’s food basket distribution continuing under close monitoring. Anti-Drug Enforcement: Iraq dismantled an international Lyrica trafficking network in Baghdad, arresting four suspects including two pharmacists and a foreign national, seizing 33,000+ pills. Iraq–US Cooperation: Prime Minister Ali Al-Zaidi met US Chargé d’Affaires Joshua Harris to reaffirm support for diplomacy and expand economic, investment, cultural, and energy cooperation under the Strategic Framework Agreement. Environment & Agriculture: Iraq’s Ministry of Environment says green belts are central to the national strategy against desertification, with decentralized execution by governorates and oversight by the ministry. Industry & Regional Markets: Turkey’s carpet sector is targeting $3.5B in exports for 2026, but says wars and logistics disruptions across key Middle East markets—including Iraq—are weighing on sales. Energy Shock Context: Analysts warn the Iran war has tightened Strait of Hormuz-linked supply chains, keeping energy and shipping costs elevated—an issue that can spill into Iraq’s construction and industrial inputs. Online Economy Scrutiny: A Nineveh content creator was arrested over questions about funding behind social media giveaways, after authorities moved the case to court. Diplomatic Reshuffle: The US named Tom Barrack as Special Envoy to Syria and Iraq, signaling tighter US diplomatic oversight in the region.

Food Supply & Trade: A shipment of 44,000 tons of US rice for Iraq arrived at Jordan’s Aqaba Port, with Iraq’s Trade Ministry saying unloading and distribution to warehouses across the country are being closely monitored despite regional shipping disruptions. Diplomacy & Security: Iraqi PM Ali Al-Zaidi met US Chargé d’Affaires Joshua Harris, reaffirming cooperation under the Strategic Framework Agreement, while Washington also pressed Baghdad to limit armed factions’ role in the next government. Anti-Drug Enforcement: Iraq dismantled an international Lyrica trafficking network, arresting four suspects (including two pharmacists and a foreign national) and seizing 33,000+ pills. Power Sector Pressure: Iraq’s electricity shortfall hit about 39,000 megawatts as fuel limits and external supply drops bite; officials warn the grid depends heavily on continued Iranian gas. Grid Connectivity: Baghdad restarted two 132-kV interconnection lines with Iraqi Kurdistan, adding 120 MW to the national system and easing load on a major substation. Oil & Logistics Bottlenecks: With Strait of Hormuz disruption, Iraq is relying more on overland tanker exports via Syria, but bureaucratic red tape is delaying thousands of tankers through security-clearance paperwork and costly tracking requirements. Investment Push: Iraq’s Planning Ministry says it will track project execution using digital and field mechanisms, targeting 84 trillion IQD in private-sector investment under the 2024–2028 development plan.

Nuclear Safety Watch: UN atomic chief Rafael Grossi warned of a growing “pattern” of attacks on nuclear power plants after a drone strike from Iraq hit Abu Dhabi’s Barakah facility, urging tighter protection as warfare increasingly targets energy infrastructure. Water & Agriculture: Iraq is preparing for a “water wave” from Syria by monitoring shared rivers around the clock and adjusting dam and reservoir operations, as Euphrates flooding has already displaced thousands in Deir Ez-Zor and Raqqa. Oil & Logistics Pressure: Strait of Hormuz disruption and renewed US-Iran tensions are keeping crude and shipping risk elevated, with reports of more “dark” vessel transits and continued pressure on regional trade routes that feed Iraq’s construction and industrial supply chains. Textiles Under Strain: The Iran war is pushing up crude-linked input costs and squeezing orders for textile manufacturers, with Surat-based producers reporting tighter margins and turning to digital printing and product expansion to cope. Regional Policy Signals: Iraq appointed an industry veteran as its new oil minister, while the wider Gulf ceasefire talks remain fragile—key for energy planning and investment confidence. Security Spillover: A missile strike hit Kuwait’s Ali Al Salem air base injuring US personnel and damaging drones, underscoring how quickly regional conflict can disrupt operations.

Iraq Energy Leadership: Iraq has appointed oil industry veteran Bassim Mohammed Khudair as its new Minister of Oil, tasking him with steering the sector through Middle East disruption as exports remain hit by the Strait of Hormuz situation. Shipping & Logistics Shock: With Hormuz still a flashpoint, reports highlight how tanker and cargo flows are being disrupted and increasingly obscured by “dark” transits, adding uncertainty for Gulf-linked supply chains that matter to Iraq’s trade and construction inputs. Textiles Under Pressure: The US-Iran standoff is feeding into higher crude-linked input costs and tighter orders, with Surat’s textile manufacturers reporting margin squeeze and shifting strategies toward digital printing and new markets. Regional Flood Risk: Rising Euphrates waters have displaced about 2,400 families in Syria’s Deir Ez-Zor and Raqqa, with alerts also issued in Iraq—another reminder that water releases and infrastructure damage can quickly spill into cross-border planning for agriculture and services. Reconstruction Watch: Syria is pitching a post-war rebuild to investors, but analysts warn sanctions exposure and weak institutions keep risk high—important for regional contractors and logistics firms that could compete for work. Ceasefire Talks: The US and Iran are reported to be moving toward a 60-day ceasefire extension and renewed nuclear talks, while Trump says the blockade will be lifted—developments that could swing oil and shipping costs fast.

Oil & Energy Governance: Iraq has appointed oil industry veteran Bassim Mohammed Khudair as its new Minister of Oil, with parliament approving the move as the country navigates export disruption tied to Strait of Hormuz instability. Gulf Shipping & Trade: With the Strait of Hormuz still volatile, Iran-linked logistics are stuck: about 20,000 containers of Iranian cargo are reported stranded in Pakistani ports, while only limited shipments are reaching Iran via Oman and Iraq. Ceasefire Watch (Industry Impact): US and Iranian negotiators have reached a tentative 60-day ceasefire extension framework, with talks set to cover shipping access through Hormuz and nuclear issues—developments that could quickly reshape regional freight and energy flows. Water & Infrastructure Risk: Flooding linked to Euphrates surges has triggered alerts in Iraq and hit northern Syria, damaging homes, farms, and water stations—an indirect hit to regional supply chains and construction activity. Agriculture & Food Safety: Iraq is increasing veterinary inspections amid a CCHF outbreak, a move that can affect livestock supply, processing, and farm-to-market operations.

Strait of Hormuz Shock to Iraq’s Construction: Strait disruptions are rerouting steel shipments and pushing freight costs higher for Iraq, with S&P Global citing steel traders saying coil transport to hubs like Sohar and Fujairah has jumped to $70–90 per tonne from $35–40 before the crisis, adding port and war-risk charges and straining Iraq’s long overland routes and limited trucking capacity. US-Iran Ceasefire Talks: The US and Iran reached a tentative deal to extend the ceasefire by 60 days and begin nuclear talks, with a draft memo saying Iran can’t impose tolls on Hormuz and must remove mines within 30 days, while the US would gradually lift its naval blockade. Iraq CCHF Crackdown: Iraq has intensified veterinary inspections ahead of Eid al-Adha as Crimean-Congo hemorrhagic fever spreads, including a first confirmed 2026 case in Kirkuk, with slaughterhouse checks and guidance for breeders and butchers. Eid Livestock Enforcement in Baghdad: Baghdad launched an Eid al-Adha crackdown on livestock slaughter, as authorities move to tighten controls during the holiday period. EU Sanctions Linked to West Bank Violence: The EU imposed sanctions on seven Israeli settlers and affiliated entities over alleged systematic violence and settlement expansion, including travel bans and asset freezes.

Iraq Anti-Corruption Drive: Prime Minister Ali Al-Zaidi ordered investigations into major state contracts to check legal compliance, public-interest safeguards, and whether deals caused financial harm—aimed at stopping misuse of public funds and speeding reforms. Environment & Industry: Iraq Green Observatory warns a “plastic tide” is choking the environment as plastic waste rises with low recycling (under 20%), with construction a major driver and much waste ending up in unregulated dumpsites along the Tigris and Euphrates. Agriculture Risk: The Ministry of the Interior cautioned farmers about datura (“devil’s trumpet”) after reports of uncontrolled growth, saying its toxic compounds threaten crops and livestock while also noting its limited medicinal use in precise doses. Regional Trade & Logistics: Uzbekistan agreed to ship initial batches to Syria—10 truckloads split between household appliances, oil products, and automotive parts—showing how regional market access is being rebuilt through trade-house logistics. Water & Infrastructure Shock: Syria reported Euphrates flooding after Turkey reopened Ataturk Dam spillway gates, flooding dozens of water stations and forcing joint monitoring—an upstream-downstream pressure point for Iraq’s water-dependent industries. Energy Shipping Pressure: US-Iran talks reportedly moved toward a 60-day ceasefire extension and nuclear talks, while the Strait of Hormuz remains a central risk for oil and gas flows that directly affects Iraq’s import costs and supply chains.

Strait of Hormuz Pressure on Iraq’s Trade: Kuwait reported missile and drone attacks as the Iran–US ceasefire stayed shaky, with drones reportedly launched from Iraq toward Gulf states—raising fresh risks for shipping and regional energy flows that Iraq exporters depend on. US Sanctions & Maritime Leverage: The US sanctioned Iran’s Persian Gulf Strait Authority, alleging it extorts vessels and funnels revenue to the IRGC, adding to the pressure campaign that keeps Hormuz uncertainty high. Diplomacy in Dispute: The White House dismissed an Iranian state-media “draft MoU” as fabricated, while Trump reiterated the Strait must remain open to all—threatening Oman if it cooperates with any Iran–Oman control plan. Jobs & Cost Shock: The ILO warned the Middle East crisis is spreading into global labour markets via fuel prices, disrupted transport, tourism hits, and remittances—conditions that can quickly feed into Iraq’s import costs and industrial demand. Flood Watch for Iraq: Authorities issued evacuation alerts along the Euphrates after heavy rain and Turkey’s water releases, a reminder that water disruptions can also disrupt farming and logistics.